Ralph D’Amico: No, I agree. And I think that I would also encourage you to think about it in a slightly different way too. I mean think about much like our debt, right? So you can actually see our debt from last year to this year has gone up, but we have maintained our leverage statistics the same. We’ve high graded the asset base etcetera, etcetera. So if you look at G&A relative to operating cash flow, right, as an example, right? I mean, that metric, right, that relational metric continues to improve year over year, even into the future, right? So as Chad said, what we put together is very scalable. And — but at the same time, we’re susceptible like everybody else to the wage inflation that you’ve seen that everybody is suffering from, right?
I mean, this year, what’s going to happen in the future? It’s a question. But to Chad’s point, losing key personnel is possibly a worse outcome. On the DD&A, I would say that working interest DD&A is usually run on a percent depletion basis, right? Whereas minerals has run a little bit differently, it’s a straight line depreciation that varies between 20 and 30 years depending on whether it’s producing or non-producing. So on a DD&A basis, you should see DD&A come down into the future as the working interest rolls off and we become a close to 100% only mineral business, right? And then it should hold relatively flat or grow depending on how many acquisitions we make, right? So it may grow along with our growth rate of acquisitions relative to the total asset base of the company.
But you should see it come down as we exit that working interest side of the business.
Donovan Schafer: Okay. And then just last question, if I can squeeze one more in. Because I think the royalty interest versus working interest dynamic, I think as — excuse me, I find it particularly fast than anything, because it does create — it poses on unique challenges in terms of trying to understand things, but I think it also provides almost a lot of kind of concealed upside in some ways where it’s like you’ll get a 7% sequential growth or total growth in production or I guess the year over year for the full years, but it’s like there’s a 49% increase in the royalty part and there’s this whole turnover underneath then if you think about a barrel of royalty, a royalty barrel versus a working interest barrel, they’re just — the value of those are so different.
So — and then of course, the way this technicality is on how this comes in with reserve reporting. So for the reserve reporting part, I kind of have this idea of, I mean, I wonder I may be able to kind of back into this by comparing past reserve reports or maybe like the Fayetteville divestiture. But I wonder as a way to approximate the difference of how PUDs get booked, would you be able to — like, would the logic hold here to say if you had one 100 net PUDs that were working interest, like you had 100 net working interest PUDs on the books, would like as a thought experiment, would you be able to look at that same 100 net PUDs currently on your books, this kind of hypothetical, but it’s working interest. Would you be able to go back to kind of the auditor or someone or just look at that and say, well, hey, if we took these same 100 net PUDs that we are allowed to book because they’re working interest.
If those exact same ones were royalty interest instead of working interest, and it’s those exact same 100 PUDs, but now we sort of don’t have almost like this quasi, like almost like a sort of assay data effectively from the operator. Now that we don’t have that, how does that flow through from SEC? Does that 100 drop to 20 because only 20 have had permits filed. Like, one, I guess, is my logic hold there? Is that like how you would go through that experiment? And then is it something you could even do or that we might be able to kind of back into from historical numbers?
Chad Stephens: Well, Donovan, what is — the subject matter you’re discussing is kind of an accounting — a complicated accounting perspective, locations in and locations out that we fortunately do not have to deal with because in January €˜20 when I took over as CEO, the first thing I did was mandate that we will no longer participate in the drilling of a new well as a non op working interest owner and we wrote off all of the PUDs, reserve PUDs that were on our reserve books. So since €˜20, we’ve had zero non op working interest PUD locations. And all of the locations that we now have, and as I mentioned earlier in Derrick’s questions, I directed the call — the participants on the call here to the approaching 2,000 drilling locations that we have now on our books, those are all since — we’ve added those since 2000 — excuse me, since 2020 when I took over.
Those are all royalty interest, mineral royalty interest locations. None are a non op working interest. So we don’t have — we don’t have to deal with the accounting rules or accounting of reserve volumes whether it’s a working interest or a royalty minerals. So — but it’s pretty simple. We dealt with that in 2020 and €“
Donovan Schafer: It was more — that’s helpful. It’s helpful reminder. I was almost thinking about it as a term of if you could come back to what that ratio is, it’s five to one or whatever working interest PUDs to what you get allowed to book when that’s more royalty, then you could work — you could use it in the opposite direction and then say, oh, well then that means if you’ve got 50 wells in progress, that would approximately be 250 PUDs or something.
